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The coalition government led by David Cameron has been criticised for sticking to a strategy of austerity even though the country was expected to suffer a triple dip recession in early 2013. It was also stripped of its prized AAA credit rating in February 2013.

Business›Economy

Britain and West can bring jobs, factories back from Asia, Cameron to say at Davos

If David Cameron has his way, perhaps replicas of a royal engagement ring will be made in British rather than Chinese factories. Photo: AFP

British Prime Minister David Cameron will use a speech at Davos on Friday to say Britain and the West have an opportunity to boost their economic fortunes by luring back jobs and factories from Asia, a trend he says is already under way.

Speaking at the World Economic Forum’s annual meeting, Cameron will say that rising costs in Asia and the need to react more quickly to changing consumer demands mean companies find the prospect of relocating jobs and services back to their home countries attractive.

“For years the West has been written off. People say that we are facing some sort of inevitable decline. They say we can’t make anything any more,” he will say, according to extracts of his speech released by his office.

“I don’t believe it has to be this way. If we make the right decisions, we may also see more of what has been a small but discernible trend where some jobs that were once offshored are coming back from East to West.”

Citing the example of the United States, where a boom in domestic shale gas production has helped lower energy costs, he will hold out the prospect of cheaper energy in Britain if it can tap its shale resources in a similar way as another possible reason for firms to relocate.

“By shortening their supply chains, they [firms] can develop new products and react more quickly to changing consumer demand,” he will say.

Cameron is under pressure to demonstrate that Britain’s surprisingly strong economic recovery is sustainable and spread across a range of industries, rather than just fuelled by government-backed mortgage schemes that have kickstarted the country’s property market.

The government is setting up an advisory service aimed at helping small and medium-sized businesses move manufacturing operations back to Britain, where the service sector generates 78 per cent of economic output.